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AUD Leads G10 Pack, Volatility Subdued


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The holiday in Tokyo limited USD/JPY to a sub-20 pip range overnight, with the rate last dealing at virtually unchanged levels, just above Y109.90.

  • Caution re: China Evergrande left both legs of the cross towards the top of the G10 FX table during Asia-Pac dealing, with the worries on that front well-documented and the latest developments covered elsewhere.
  • This comes after USD outperformance allowed the rate to show above Y110.00 on Friday, although much like today's Asia-Pac session, the move was shallow and limited.
  • Political matters continue to dominate the local newswires, with Taro Kono the clear favourite to assume LDP Party leadership, per a Kyodo poll covering party members and supporters. Although it isn't a one horse race by any means, with a Mainichi poll covering the views of LDP MPs showing that particular group favours Fumio Kishida ahead of the upcoming leadership election.
  • Initial support is located at the Aug 16/Sep 15 low (Y109.11). Initial firm resistance is seen at the Sep 8 & Aug 13 highs (Y110.45/46), a break above there would expose the Aug 11 high and key resistance (Y110.80)
  • Broader risk dynamics and the London/NY reaction to Evergrande matters will likely shape trade in the pair on Monday. Note that the S&P 500 e-mini contract is trading below its 50- & 55-DMAs (there hasn't been a close below those DMAs since March of this year).